Reference no: EM132444756
1. Find a Beta, R squared and alpha for JNJ for the last 60 months. Use a start date of 11/1/2007. (Do not attempt to use the published beta for JNJ. Your calculated 60 month beta should be different from that as it covers a shorter period of time). What does each mean?
2. What stage of the industry life cycle is JNJ in and how does that affect its economic outlook?
3. What Fiscal & Monetary actions could help or hurt JNJ? Namely is there anything in the coming 'Fiscal cliff' that could negatively affect JNJ?
4. Using at least 3 different technical indicators prove this is a good or poor investment
5. Calculate the following ratios and explain what they tell us about JNJ
- ROE
- ROA
- Current Ratio
- Market to Book ratio
- P/E ratio (use last fiscal year's earnings and stock price as of 11/1/2012)
- Earnings yield
- Debt to Equity ratio
6. Use a 2 stage Dividend Discount model to calculate the value of the company. To do this you will need to use the CAPM formula to calculate a required rate of return. Use the Beta you calculated in #1 as well as a mkt risk premium of 8% and a risk free rate of 2%. Additionally you will need to calculate the growth rate of dividends using the ROE. Assume that the growth you calculate will last for 5 years after which dividends will grow at 4% into perpetuity.
7. Analyze the balance sheet, the income statement, and statement of cash flows and cite one piece of support from each statement that justifies your positive or negative opinion of JNJ
8. Finally, would you recommend I invest in JNJ or not and why?
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